Demography and development

The World Bank

Kim for president

IN THE event, the controversial and closely fought contest to become president of the World Bank ended in exactly the same way as all the earlier stitch-ups: the American candidate won. Jim Yong Kim, currently head of Dartmouth College in New Hampshire, will take over from Robert Zoellick in July. But the contest has raised awkward questions both about the bank and Mr Kim himself which will not be laid to rest so smoothly.

The contest was unprecedented from the start, not least in that it was a contest. For the first time, America's favourite was challenged by two serious contenders, both from emerging markets. They were Ngozi Okonjo-Iweala, the finance minister of Nigeria, and José Antonia Ocampo of Colombia, who pulled out late in the day. A group of American professors and development experts, led by William Easterly of New York University and Lant Pritchett of Harvard's Kennedy School, criticised Mr Kim for having too narrow a field of expertise to run the world's premier development institution. (The Economist also supported Mrs Okonjo-Iweala.) Members of the administration and Jeffrey Sachs, the director of the Earth Institute at Columbia University who was himself nominated for the World Bank job, supported Mr Kim vigorously.

Unfortunately, while the nominations were refreshingly open, the competition itself reverted to type, which means the job was decided behind closed doors. Dr Kim held no public discussions of his views and when a Washington think-tank, the Centre for Global Development, tried to hold televised question-and-answer sessions for all the candidates, he did not attend, citing scheduling conflicts.

The secretiveness drew the ire of some World Bank members. South Africa's finance minister, Pravin Gordhan, told the Financial Times “there are serious concerns about the levels of transparency.” Leaders of international NGOs, such as Oxfam and Save the Children, joined in the criticism. And Mo Ibrahim, a Sudanese-born businessman, pointed out that “no one can lecture developing countries on how to manage their processes if [global public institutions] so brazenly do not conform to the same standards.”

But, as Dan Drezner of the Fletcher School at Tufts University pointed out, Barack Obama was never, in an election year, going to give his opponents any unnecessary ammunition by failing to get his choice for the World Bank accepted.

No one can know in advance how Dr Kim will fare. Forecasts in this area have a way of going spectacularly awry. Dominique Strauss-Kahn was widely expected to be a disaster before he took over the bank's twin sister organisation, the IMF. But until his public humiliation at the very end of his term, the Frenchman proved to be a successful IMF chief.

Michael Woolcock, a World Bank staffer, suggests that two rather different models of development have been pitted against one another in the contest for president. On the one hand is what he calls Big Development, whose aim is the transformation of entire countries through investments in national education, justice and public health. Governments are essential to Big Development because they are responsible for the overall policy. And the World Bank is pre-eminently a Big Development institution. On the other hand is Small Development. “Inspired less by transformational visions of entire countries,” Mr Woolcock argues, “and more by the immediate plight of particular demographic groups (AIDS orphans, child soldiers, 'the poor') living in particular geographic places (disaster zones, refugee camps, urban slums), Small Development advocates focus not on building systems in the medium run but on compensating for the failure of systems in the short run. ‘Development' thus becomes an exercise in advocacy, in accurate targeting, in identifying particular ‘tools' that ‘work'”.

In this scheme of things Mrs Okonjo-Iweala, the former finance minister, represented Big Development; Dr Kim, a public-health advocate, Small. Dr Kim was almost certainly picked because of his passport. But if his background is any guide, his tenure as chief is likely to shift the bank more towards Small Development. Whether that is a good thing on balance remains to be seen.

Let Ngozi shows her efficiency or competency in her own country. It is better to see her use all her expertise to develop Nigeria rather than being president of the world bank.
She may be better qualified than Kim but I don't see the evidence of that. Having an Ivy League degree and 10 years working at the world bank is not enough to say that she is better qualified. What is the impact of the two (Kim and Ngozi) in the institutions they have worked for or their nations? What have they contributed what have they solved? I have a high university degree and have worked for international institutions for years. That doesn't make me a good candidate.

What the writer of this article missed is that Mr Kim was a 'compromise' candidate put forward by America, who were weary of possibly serious challenges from emerging powers such as China, South Korea, India and Russia, against the traditional American hold on the position.

Yes, Dr Kim is an American citizen, but more importantly, he is East Asian. Better than this even, he is South Korean. A perfect compromise solution between China and Japan, both of which are world's 2nd and 3rd biggest economy respectively. Let's not forget that South Korea itself is now the world's 13th biggest economic powerhouse, which can proudly boast global brands such as Samsung, LG, Hyundai and Kia automotives. It is also the most important ship/LNG building nation. A spectacular example of 'rags to riches' case.

By putting forward Dr Kim, Obama managed to keep the American hold on the position, while appeasing the most politically and economically significant emerging block: ie East Asia. What a stroke of genius. But then again, I wouldn't expect the Economist to get that.

On the contrary to many commenters, I am very impressed with Obama's selection of Dr Kim who is not an "investment banker". The role of World Bank president used to be to wine and dine with corrput political leaders of developing countries, lending lots of money to them so that they can become rich. Ex-presidents of WB used to behave like "investment bankers", lending money for mega-projects which are not World Bank's business, and wasting tax payers money of doner countries.

Obama wants to change this by selecting a person who is not a professional "investment banker". Obama, having Kenyan father and grown up in Indonesia, should know well what is needed in developing countries. World Bank is not an investment bank. Developing countries should find funding for their mega projects from commercial investors. World Bank money should be used solely for aids purposes. That is, to improve health, education, and food production. This will benefit people who really need help. World Bank money should not be used to enrich politicians and their cronies of developing countries.

Obama made a good selection because Kim is not a professional investment banker so he would not involve in "investment banking activities". He seems like a perfect guy.

For those feel sour, World Bank is an institution run by money contributed by mostly US, EU, and Japan. You should respect their selection because they are the lenders. They are not going to let borrowers manage their money. If they cannot control, they won't put money on World Bank. Without their money, no World Bank. Thus no World Bank presidency! That's why Nigerian candidate never had chance.

This is very off topic, but that Harvard professor, Lant Pritchett, is really on to something when he talks about technology destroying the world labor market. I think many of the problems we face today pale in comparison to that singular problem that we will face/are facing.

Can you imagine a world with a fully functional google car? No cab drivers, UPS drivers, the like. I still have no idea how there is a large pool of "factory jobs." You'd think robotics would have taken control of all those by now. IBM's "Watson" is literally 10 years away from taking away half the analytical jobs of the world.

This is a real big problem, and I wish The Economist (or someone smarter than me) would look into it more. (And report on it so I don't have to read any collegiate economic papers, because those are really boring.)

Only time will tell concerning the appointment of Dr. Kim.Personally, I think in the future the appointment of the world bank president should be done by an international consulting firm,the economist,financial times,BBC,media representatives from Asia and Africa.Politics will kill the world some day if we are not careful with today.

Emerging countries, get over yourselves. All this talk about fairness and transparency. Those who contribute the funds should pick who manages it. Simple. You don't like it, then don't borrow from them, or better yet, start your own thing. Why must emerging countries always be fighting to take over institutions that were created by Western world? Is there a law that says there can only be one World Bank? Perhaps a different bank can't use the name but surely the emerging world can create a similar intitutions that works the way they like it?

Actually Kim is better qualified and more intelligent than her. Obama is a smart person surrounded by intelligent people. He should have made his decision for the best interest of US and other major lenders. America doesn't let corrupt borrowers manage her money! Period.

BTW, I don't like corrupt individuals managing World Bank and IMF. I rather prefer less capable but honest and clean person to control the institutions.

It is so much easier to profess about transparency and good governance than to follow these principles. Both IMF and World bank would have gained in credibility if they had adopted a transparent selection process based solely on merit rather than on power games.

Ngozi has kept Nigeria from the brink and without the firepower of the individual EU governments and the ECB, who haven't managed to solve any of the fundamental problems of Europe.
Precisely because she has real battlefield experience, Ngozi is so well suited for the job.
I am not Nigerian, but I have done business there. Not everyone in Africa is a crook and not everyone in the USA and Europe is a saint.

The new Bank president, who has never previously headed a major development organization of any type, will need a very strong COO (insider or outsider)who has effectively managed a large-scale, knowledge-based organization, to run the Bank. Once upon a time it was possible for an outsider President to come in and do it himself (eg McNamara). But the institutional complexities, conflicted positions, conflicted objectives, displacement of goals and gridlock that characterize the Bank are far greater now. Without a super-COO the new president despite or because of best of intentions will get hopelessly lost.

Either the World Bank changes in the future or it will become a second class development institution. The reason is simple, the emerging economies will surpass in size the "submerging" ones. Otherwise they will create and sponsor their own develompment banks.

Hi, it is very wrong to malign an individuals character in such a manner without reason and isn't in the spirit of this site.
I am Nigerian too, and am practical enough(since that is the first step to resolve the many issues) to admit Nigeria's got urgent, systemic issues, but wouldn't start pointing fingers at the innocent individuals, for the overall problems at hand.
About 1000 Americans go to the airport everyday without having international passports, but I wouldn't because of that say all Americans are stupid!

Agree with you.
China and Brazil together have more cash reserves and experience in development not only institutionally, economically and psychologically, but also having graduated from aid !
Don't understand their overly-optimistic hope.
They could have already created such a powerful development institution on their own. Only with the south-south potential for trade and investment integration, articulation of value and production chains, they are better off without the North.

"in a world plagued by red-neck America"
You don't seem to know what you are talking about. Obama's electoral base is not red-necks. It may be more accurate to say "dudes". If you don't like America, then pull out from World Bank. It's not your bank at all, because it's not run by your money. Obama is trying to help your poor people, but not rich people like you who have computers and internet connections. Obama is doing a very good job indeed!

The rise of Dr. Kim to the President of World Bank, the most prestigious and powerful international financial institution in the world, is a global phenomenon with significant bearing on the future of developing economies. Almost half the world lives on less than $2.50 a day and the GDP of the 41 Heavily Indebted Poor Countries (HIPC) is less than the wealth of the world’s seven richest people combined. The growing inefficiency, corruption, and poor governance engulfed by alarmingly increasing terrorism have marginalized the prospects for economic development in poor countries. We the people of Asia are quite optimistic that Dr. Kim would be able to triumph over the war against poverty, underdevelopment and terrorism during his tenure ensuring peace, progress and stability in developing economies through inducting a pragmatic policy with effective implementation.

It is called the World Bank for a reason; it is expected to respond to the needs of all countries, not just the US (there's something called the Federal Reserve for that). In order to adhere to this objective, the candidate for the position is expected to be able to achieve the goals (big development goals) for these particular countries. If most institutions and countries are under the impression that the nominee cannot successfully direct the World Bank, there must be a reason (the case being he has no field experience).

It is the right of the countries borrowing the money to have a say in who is managing the money they're so "dependent" on.

Aiming to help the small people in the developing world should be the only focus for the World Bank. For too many decades it has filled the pockets of the Central Banks and government budgets allowing only thieves to infiltrate the development process.

The money never trickled down. It got stuck in the fingers of massive corruption which vanquished any hopes of alleviating poverty, the Bank's prime goal. By focusing on micro finance, especially underwriting the roles of women as entrepreneurs, may help to shift the deafening emphasis away from power, wealth and status (i.e. military and war) onto education and healthcare, where it should be. If infrastructure is not part of the future Plan, then there never was one.